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Thursday, May 13, 2021
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UK domestic car sales slump

The UK’s car manufacturing has few domestic takers because of new rule and brexit

The UK’s car manufacturing industry has hit a slump as it finds fewer UK takers. This fall in the number of cars for the domestic market is being attributed to the new rule for diesel cars and economic worries related to brexit. The UK car manufacturing has suffered 28 per cent collapse on the domestic front in November on a year-on-year basis, according to official data. This plunge in figures for domestically-built cars for the UK market is the biggest since September 2011 when the industry was still under the impact of the financial crisis.

The UK car manufacturing industry rolled out 169,247 cars in the UK last month, out of which merely 24,276 were headed for the domestic market. Mike Hawes, the chief executive of trade body, the Society of Motor Manufacturers and Traders (SMMT) which collated the numbers, blamed the crash on “Brexit uncertainty, coupled with confusion over diesel taxation and air quality plans”. He added that sale of new cars in the UK highlighted the problem. November’s registrations of new cars data – which does not account for where a vehicle was built – recorded an 11.2pc drop.

The sale of diesel cars in the country was affected by the announcement by Chancellor Philip Hammond last month, in which he introduced a levy on new diesel cars as part of measures to reduce air pollution. It is proposed that the income generated as a result of the implementation of the new rule, will be used to fund green measures. But, the car industry reacted sharply to the new measure, saying that the use of diesel cars has been demonised by the government.

They claimed that the new move only affected new diesel cars which were as clean as petrol cars as they have the latest engines. They argued that the step is not beneficial as it has not addressed older diesel cars which are already in use and cause more pollution.

The step by the government has resulted in a drop in the sale of new diesel cars which dropped by 30.6 per cent in November. On the other hand, the number of cars meant for foreign markets rose to 135,502, up by 1.3 per cent. The car manufacturing industry has been strongly arguing for a tariff-free trade deal under brexit negotiations and said that standard WTO tariffs and customs barriers will cause £1,500 price hike on the cost of an imported car and result in a £4.5bn hit to Britain’s automotive sector which is worth £77.5bn on an annual basis.

Hawes further said that whilst it is good to see exports grow in November, this only reinforces how overseas demand remains the driving force for UK car manufacturing. Clarity on the nature of future overseas trading relationships, including details on transition arrangements with the EU, is vital for future growth and success.


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